Creating a Fundraising Pitch 2
Recognising the importance of the fundraising to any new or growing business I recently wrote an article containing some general advice on creating the perfect pitch.
Here’s some more specific advice on how to structure the slide deck in order to maximise the chances of success.
Section 1: Statement of Purpose In a short and digestible format (imagine it as a tweet), state who you are and what you do. This may be the most important statement in the presentation so it’s worth spending some time on, so expect it to be written and rewritten dozens of times. If you get it right this is the statement that’s going to catch the attention of potential investors, if it misses the target the presentation is going to look like a book without a cover and nobody is going to buy it!
Section 2: Introduce the Team Potential are often investing in the team as much as the product. They need to be convinced that they have the right experience and track record of delivery, that they have the expertise in the chosen market and that they have the collective will and confidence that they will deliver. This point is worth considering when delivering the pitch; make sure you have the right team members present to demonstrate capability in all areas.
Section 3: Identify the Problem Use this slide to talk about the problem you are solving and who has the problem. You can talk about the current solutions in the market, but don’t spend too much time on the competitive landscape on this slide, that come’s on a later slide.
Ideally, try and tell a relatable story when you are defining the problem. The more you can make the problem as real as possible, the more your investors will understand your business and your goals.
Section 4: Present the Solution You’ll be tempted to move this slide closer to the beginning of your pitch deck, but try and resist the temptation. This is classic storytelling where you build up the problem and describe how bad it is for lots of people. Now your product or service is coming to the rescue to help solve that problem.
The focus needs to be on how the product will solve the problems of the customer rather than on the product itself. Try and keep the deck focused on this format and it will tell a better story. If possible, use pictures and stories to describe the solution, this is particularly effective for complex stories e.g. pharmaceuticals; showing is nearly always better than telling.
If intellectual property or strategic partnerships are key to the offering, this is the point at which they should be included.
Section 5: Business Model Investors need to understand the market for the product; unmet need, competitive landscape and how the pricing fits into the larger market. An overview of the business model with particular reference to risk reduction and milestone achievement will reap benefits.
Section 6: Marketing and Sales Strategy
Use this sect to outline your marketing and sales plan. You’ll want to detail the key tactics that you intend to use to get your product in front of prospective customers and what the market landscape looks like. Finding and winning customers can sometimes be the biggest challenge for a growing business, so it’s important to show a solid grasp of how the target market will be reached and what sales channels will be utilised.
Section 7: Financials Investors will expect to see your sales forecast, profit and loss statement, and cash flow forecast for at least three years but not in a presentation. Limit the slide deck to charts that show sales, total customers, total expenses, and profits.
You should be prepared to discuss the underlying assumptions that you’ve made to arrive at the sales goals and what the key expense drivers are. Remember to try and be realistic. Investors see “hockey stick” projections all the time and will mentally be cutting your projections in half. If you can explain growth based on historical traction or compared to similar company in a related industry, that is extremely useful.
Section 8: Competition Every business has competition, even if you are planning a novel solution, the potential customers are using alternative solutions to solve their problems today.
Describe how the products fit into the competitive landscape and how it differentiates from the alternatives on the market today. The key here is explaining how differentiation is achieved and why the products will be successful.
Section 9: Investment and Use of Funds The investors need to know how much money is being sought, they also want to know how it’s going to be used and, specifically, how it will it will help achieve the business goals. If some investors are already on board these should be referenced with an explanation of why they chose to invest.
Investors also want to know how and when they will realise a return. An “exit strategy” slide should be included outlining how a return will be achieved once value has been added, either through acquisition by a larger player in the market or via IPO and going public.
Once the pitch has been made it’s important to have some additional documentation available so that potential investors can study the detail.
Additional documents should include:
Executive Summary - sometimes called a summary memo, is a two page overview of the business. It’s a document that investors can share with their partners and others in their firm to provide an overview of the proposition. The executive summary should cover what’s in your pitch deck, but in written form.
Technical Documentation – pharmaceutical or technical companies often employ novel or proprietary technology. Investors in these types of companies will often want to vet the technical claims with an expert, so providing more detailed documentation, diagrams, workflows, and so on might be important.
Detailed Financial Models - detailed financial forecasts for at least the next three years will be required. Investors will want to see plans for hiring and employee-related expenses, R&D expenses, manufacturing costs, marketing expenses, and so on. Be prepared to provide a detailed sales forecast, profit and loss forecast, and cash flow forecast. A balance sheet is also often required.
Detailed Market Research - more details on your target market and the market research may be requested. This isn’t always the case, but if the information is available it’s a good idea to be ready to present it in some format. Again, this data shouldn’t be part of the initial pitch deck, but instead should be ready if requested.